Icahn’s CVR Corp. Said to Be Readying Offer for Delek Holdings (DK)

Shares of Delek US Holdings Inc. (DK) were trading up +2.51 or +16.86 percent to $17.40 per share in Friday’s premarket after news broke late yesterday that CVR energy (CVI) was preparing to make an offer for the company. Delek US Holding stock closed at $14.89, up +0.62 or +4.34 percent in Thursday’s regular trading session.

Stock Analysis

Founded in 2001, Brentwood, Tennessee based Delek US Holdings Inc. is the operator of an integrated downstream energy company focusing on petroleum refining, convenience store retailing business and wholesale distribution of petroleum products.

The company is divided in three major segments: Logistics, Refining and Retail. The refining segment operates two refineries in El Dorado, Arkansas and Tyler, Texas that produce 155,000 barrels per day in combined production capacity, which are used for the manufacture of a variety of petroleum products. The logistics segment gathers and transports crude oil, while the retail segment markets gasoline and other fuel products through 366 company operated gasoline and convenience stores under the MAPCO brand.

Sugarland, Texas based CVR Energy Inc. was founded in 1906 and is a diversified holding company focused primarily on petroleum refining and the nitrogen fertilizer manufacturing business. The company operates the two businesses through its holdings in CVR Refining, LP and CVR Partners LP. CVR Energy’s capacity for refining crude oil and feedstocks came to 210,488 barrels per day in the second quarter.

According to an article in the New York Post yesterday, a source allegedly close to the matter said that CVR Energy was preparing to make an offer for Delek US Holdings. As of April 19th, Carl Icahn had an 82 percent stake in CVR Energy and was speculated to be accumulating a personal stake in Delek Holdings. In addition, there was speculation that Icahn was preparing to take full ownership of CVR.

Delek took on a 48 percent stake in Texas company, Alon USA Energy in April of 2015. Delek was interested in acquiring an additional stake after the expiration of their agreement with Alon in May which capped the company’s stake to 49.99 percent. Neither company could be reached to comment on the potential CVR Energy situation, while CVR Energy declined to comment on the matter.

The stocks of both companies have fallen significantly in the last year; with the crash of the price of crude oil and the ensuing glut have put considerable pressure on the entire industry. Delek stock is down almost 60 percent since trading above $37 per share in August of 2015 and is down -39 percent year to date, while CVR Energy shares have declined almost -70 percent from their high of 48.37 made in November of 2015 and are down -65 percent year to date. Both stocks are trading higher this morning, which could be an indication that a deal could in fact be in the works.

Phillip Morris says it has captured three percent of the Japanese market.

Published on Aug 12, 2016

By Jay Hawk

Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.